Electrolux AB Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Bj÷rn Enarson - Danske Bank - Analyst : I wonder if you can walk us through a little bit on the external factors per quarter here and if there is a mix versus price -- potential price hikes that we should be aware of. I mean, are we talking about quite early price hikes and then we're going to see a negative impact from tariffs, more pronounced so looking ahead or how would that play out?

Question: Bj÷rn Enarson - Danske Bank - Analyst : Have you seen anything kind of consumers pre-buying ahead of tariffs or is that the sense that you have?

Question: James Moore - Redburn Atlantic - Analyst : I have a number of questions, if I could. I was wondering if you could help please on the breakdown of your US cost of goods sold or purchases. Many companies have now broken that out. You've mentioned in the past that 20% is sourced from Asia, largely China, but I wondered if you could just update us with what the percentage of local US exposure is, what's localized, how much is Mexico, we estimate 25%, but some quantification on that would be helpful, and whether you could give what some are saying, which is what percentage of your Mexico import into the US is USMCA compliant, is it 97%, 85%, et cetera. So I guess that's the first question, just breaking down the pie chart. My second question is, of the import from China, close to 20%, everybody's got a choice to put the 170% price hike on or cease business or re-route. Could you just try to lay out what degree you are thinking of ceasing business or rerouting?

Question: James Moore - Redburn Atlantic - Analyst : Thanks. Just to follow up on that, when it comes to the stuff that's coming from China, in my memory, it's mostly microwaves, air conditioning, and small domestic appliances, which is your source product business. Are you going to cease trading on some of that stuff just because it's effectively an embargo you're going to predominantly put the price hike up.

Question: James Moore - Redburn Atlantic - Analyst : And just finally, if I could, I mean, net-net, do you see North American margins deteriorating when the timing issues of this bite in the second half? Or do you think you can still continue to progress with your internal savings actions?

Question: Akash Gupta - JPMorgan - Analyst : I have two questions as well. The first one is to follow-up on the US. So we have your US peer Whirlpool commenting earlier that they have seen significant sourcing or significant inflows from Asian players ahead of tariffs coming in in both Q4 and Q1, and because of that they see a bit of weaker pricing in the first half before potentially benefiting in the second half from their US production footprint. My question is more like when we look at your US production footprint versus competitor, how do you -- in which categories do you see advantage and where do you see disadvantage? I mean, today you are talking about [erasing] prices to offset the impact, but you have invested heavily in North American factory transition. I'm just wondering whether there would be incremental need for CapEx to strengthen your US footprint. So that's the first question.

Question: Akash Gupta - JPMorgan - Analyst : Thank you. And my second question is on European competition picture. So in the past when we have these trade-related headwinds and if, Chinese components are not going in the US, they will likely end up elsewhere. Do you see any risk in Europe, both positive and negative, and maybe you can benefit from lower sourcing cost, but at the same time, you may also see some competitive pressure, so any second derivative effect that you expect in Europe in the rest of the year.

Question: Uma Samlin - Bank of America Merril Lynch - Analyst : So my first question is on the -- your view of the competitive landscape in the US and how has -- how have you been able to gain some market share and to what extent you have done so. And also, maybe if you could give us some insight on your pricing strategy there. I have seen from -- in the past quarter that some of your competitors had already done a few rounds of price increases, and it seems like pricing was more flat for you in Q1, and what do you plan to do in terms of pricing and what kind of like timeline are you expecting that to be? That's my first question.

Question: Uma Samlin - Bank of America Merril Lynch - Analyst : Thank you very much. That's very helpful. My second question is a follow-up on the tariff impact. Would you be able to just give us a bit more detailed breakdown on what are the sort of tariff impact on raw materials and components costs in North America so to help us to understand how much price increases potentially need to be able to offset that.

Question: Martin Wilkie - Citi - Analyst : Coming back to the North America business, obviously you've made a lot of footprint changes there with investing in Anderson and some other automation investments. If we are going to be seeing a potential volume risk from higher pricing, is your footprint in terms of the fixed capacity of absorbed and is it more flexible now? How do you think about how you can ramp up and ramp down capacity as the volume outlook changes because of tariffs and just if you could talk a little bit now about how that manufacturing is set up relative to how it was a few years ago.

Question: Timothy Lee - Barclays - Analyst : My first question will be on North America again. So apart from the tariff impact, so in the first quarter you still make some loss in the region despite you also have the SEK1.4 billion cost saving, which is in North America. And previously you also mentioned that the Springfield factory would have reached an optimal level of efficiency by the end of last year. So where are we now in terms of efficiency and what do you think will be the normalized margin level in South America going forward?

Question: Timothy Lee - Barclays - Analyst : Yeah, understood. Thank you very much. And my second question will be on Latin America and I think you mentioned that demand is slow in Brazil. In the quarter, you also -- you still have a positive organic sales growth, but in terms of outlook you maintained a neutral outlook. Should I consider that in the coming quarters, we will probably see the organic sales growth in Latin America, especially in Brazil, to gradually come down and maybe even go to negative. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 7:00AM, ELUXb.ST - Q1 2025 Electrolux AB Earnings Call

Question: Johan Eliason - Kepler Cheuvreux - Analyst : Just a follow up -- sorry to bother you about tariffs again, back and forth, but we obviously know that what Whirlpool talked about tariffs and the price compensation they need, but you have -- I mean that profit (inaudible) are in the wet products and your cats are more important categories, the cold product and to some extent the (inaudible) product. Would you say in those product categories you need to hike prices less than your specific competitors in those segments in order to offset your tariff impact.

Question: Johan Eliason - Kepler Cheuvreux - Analyst : Excellent. And then tariffs aside, you have a partial gain in your anti-dumping tariffs on top mounted fridges from Thailand with some rates between 13% and 36% already as of early February. Have you seen any impact from that? Do you think the final decision will be more related to the, I think, 136%. You were asking for or is this sort of anti-dumping this that you think will prevail for this important product category for you?

Question: Johan Eliason - Kepler Cheuvreux - Analyst : Excellent. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 29, 2025 / 7:00AM, ELUXb.ST - Q1 2025 Electrolux AB Earnings Call And then finally a question for Therese maybe on the cash flow. I mean, I understand these sort of tariffs are supposed to be paid within 10 days of the products entering the US. Does that have any significant impact on your seasonal cash flow profile going forward, considering that [you are rounding] with a fairly high debt level already.

Question: Johan Eliason - Kepler Cheuvreux - Analyst : And how will that sort of impact your seasonal cash flow. I think typically, the end of the year is the strongest will there be an even more accentuated development of your cash flow profile this year because of this.

Question: Johan Eliason - Kepler Cheuvreux - Analyst : Okay, thank you very much.

Question: Bj÷rn Enarson - Danske Bank - Analyst : If I may ask on LatAm, again, I mean, we're talking about Chinese volumes entering Europe but also LatAm and perhaps increasing that more than we have seen in the past. Should -- what kind of change to the market will that have on you and what can you do to keep your, I mean, quite robust operation that you have had there for quite many years despite the volatile market.

Question: Bj÷rn Enarson - Danske Bank - Analyst : And with that, do you mean that you have a very strong position in segments that perhaps you are not seeing the same new competition? If that's the case that we see new competition in the region, maybe more entry level and your position is more robust or (multiple speakers)--